Cryptocurrency lending firm Celsius, currently undergoing bankruptcy proceedings, is considering sending ballots to its clients to vote on a proposed settlement plan. The plan involves a consortium named Fahrenheit purchasing Celsius' assets and forming a new company. In this scenario, the assets and equity of the new company would be distributed to Celsius' clients. The proposed settlement aims to compensate Celsius Earn plan participants and enhance clients' recoveries by 5% in order to address claims of fraud and misrepresentation by Celsius management.
Bankruptcy Court Judge Martin Glenn for the Southern District of New York has granted permission for Celsius clients to vote on this class claims settlement. The settlement proposal is reportedly backed by assets valued at around $2 billion. Judge Glenn has also request st Celsius to provide clear and Straightforward explanations of the settlement plan, including details about cryptocurrency volatility and potential challenges faced by Celsius' mining operations. Clients have the option to opt out of the settlement if they choose not to participate. Payments could commence by the end of the year if the plan is approved.
For the plan to move forward, it still requires court approval, which is anticipated to take place in October. The consortium Fahrenheit won an auction for Celsius' assets on May 25. Part of Fahrenheit's offer included a commitment from one of its members, US Bitcoin Corp., to establish a new 100-megawatt crypto mining plant. Celsius suspended withdrawals on June 13, 2022, due to the collapse of the Terra ecosystem and filed for bankruptcy in July of the same year. The former CEO, Alex Mashinsky, has faced fraud charges, and both the US Securities and Exchange Commission and the US Federal Trade Commission have taken legal actions against Celsius and its executives.
